RICHMOND, VA. and WESTLAKE, TEXAS – Performance Food Group (PFG) Company, a foodservice distribution firm, entered into a definitive agreement to acquire Core-Mark Holding Company Inc., a leading wholesale distributor to the convenience retail industry, in a stock and cash transaction.
PFG expects the acquisition to be accretive to adjusted diluted earnings per share in the first full fiscal year following closing of the transaction, excluding expected cost synergies.
The board of directors of each company unanimously approved the transaction in which Core-Mark shareholders will receive $23.875 per share in cash and 0.44 PFG shares for each Core-Mark share. The transaction values Core-Mark at approximately $2.5 billion, including Core-Mark’s net debt. Core-Mark shareholders will own approximately 13% of the combined company upon closing of the transaction. Core-Mark expects to continue paying its current quarterly dividend through the completion of the transaction. Additionally, at least one current Core-Mark director will be added to the PFG board of directors.
PFG’s Vistar segment will include the Core-Mark and Eby-Brown businesses. PFG said the expanded business will operate under the Core-Mark brand, and headquarters for the business will be in Westlake, Texas, with Eby-Brown maintaining operations in Naperville, Ill. Scott McPherson will continue in his role as president and chief executive officer of Core-Mark. Tom Wake will continue as president and CEO of Eby-Brown, reporting to McPherson.
“Core-Mark is an outstanding company that we believe will significantly strengthen our business diversification and expansion into the convenience store channel,” said George Holm, PFG chairman, president and CEO. “Core-Mark brings a highly skilled and experienced workforce along with an experienced senior leadership team, which will be valuable additions to the PFG family of companies.
“This transaction will also combine Core-Mark’s footprint and operational excellence with PFG’s existing capabilities in both convenience and foodservice,” Holm said. “The deal comes with strong strategic and financial merits which we believe will generate significant customer benefits and help PFG continue to create long term shareholder value. The two organizations have similar cultures, which we expect will facilitate a smooth integration and transition process. We look forward to getting to know the associates at Core-Mark better and building a strong future as one organization.”
Core-Mark is one of the largest wholesale distributors to convenience retail in North America with approximately $17 billion in net sales. The company has approximately 7,500 employees and operates 32 distribution centers across the United States and Canada. Core-Mark services approximately 40,000 customer locations in all 50 states, five Canadian provinces and two Canadian territories. PFG expects the acquisition to expand the company’s geographic reach and market diversification into the convenience store channel, adding approximately $17 billion to net sales, resulting in total net sales of approximately $44 billion.
“This transaction brings together two companies known for their customer-focused approach and dedication to their employees,” McPherson said. “As part of our continuous focus to maximize shareholder value and better serve our customers, our board evaluated the transaction and determined this combination provides our investors immediate value and the opportunity to participate in the upside potential of being part of a larger, diversified and customer-centric supplier in the foodservice and convenience retail industry.
“The combination of our two highly complementary businesses creates an even stronger platform to drive growth, as we deliver a best-in-class offering to our customers,” he added. “I’d like to thank the entire Core-Mark team for their hard work and focus in helping us reach this exciting milestone.”
The transaction is expected to close in the first half of calendar 2022, subject to US federal antitrust clearance, Core-Mark shareholder approval and other customary closing conditions. The transaction is not subject to PFG shareholder approval. The acquisition is expected to generate approximately $40 million of annual net cost synergies, achieved by the third full year following the closing of the transaction.